Condo vs. Single Family vs. Duplex

[Nick A.]

Hey everyone -

First post here as I'm just getting my feet wet, but I'm looking to buy my first rental property within the next 6-9 months and was curious what you would recommend for a first time investor.  I'm waiting until I pay off my primary residence and will likely put 50% down or something along those lines.

I've heard that a single family will appreciate the fastest, but has more of a hassle factor in terms of managing it. Condos are low maintenance, but you have the HOA fees. The duplexes available in the Boston market are typically in rougher areas that come with another set of issues.

If it was your first rental property, which of the three would you go with (all other things being equal - assuming they were in the same quality location).  Or even better, what DID you go with for your first rental property and why?

Thanks in advance!

Best,

Nick

[Brent Coombs]

I'm guessing your CPA would recommend that you put even LESS than 50% of your own cash down for rentals? Would you listen to THAT suggestion? ie. Your family home wouldn't be at risk.

Why would you wait until you've saved $100k to buy ONE $200k rental, when you could buy ANOTHER one each time you saved up just $50k (ie. 75% leverage instead of 50%)?

I'm guessing your answer might be: you don't think they'll cash flow at 75% leverage?

My response to that would be: How good are the deals you're finding? There's PLENTY of rentals that will still cash flow at 75% leverage. (But perhaps not in as cotton-cushioned locations).

Remember, your TENANTS are still paying off your investment mortgages for you, whether your own other income soars or nor not. But with higher leverage, it just takes extra time. But remember, with DOUBLE the bought number of properties, it shortens the time back again.

In 20 years, all else being equal, would you prefer to own, free and clear, 20 rentals, or 40? My 2c...